An instant view ¨CThe global market of the washing machine made in China
2008-08-12

Worldwide demand for washing machines and dryers has slowed, with volume sales for the former growing by only about 2 percent in 2005. China's volume exports of washing machines, however, went up by an impressive 51 percent in the same year.

The global market in brief The recent performance of the washing machine market has been adversely affected by lower consumer confidence in economic conditions. Though facing with challenges at home and abroad, and a global slowdown in sales, China's exports of washing machines are growing at a healthy pace. Lower prices and improving product quality are reasons more overseas buyers are sourcing washing machines from China. Large multinational companies that have set up factories in China are also contributing to the country's sizeable export growth. Rising domestic consumer demand for washing machines has attracted a number of well-known international companies to invest in or set up their own production facilities in China. Most of the top-loading units are offered by Chinese suppliers, which are less expensive to produce. Only a handful of the large and well established local companies have the capability to produce front-loading models. Facing the trend of globalize market and competition, the appliance maker says brand reputation has been widely recognized as a business competence.

Export Challenges For China suppliers exporting to the EU, meeting the RoHS requirements is a major challenge. The high cost of compliance is a concern for companies with limited financial resources as RoHS-compliant materials and components are more expensive. In addition, the necessary assembly line modifications push up costs considerably. 

Nevertheless, most washing machine makers targeting the EU have already started working with buyers and testing institutes to develop products that meet the RoHS guidelines. Most manufacturers are now requiring their material suppliers to provide certification ensuring the quality and safety of the components. They are also asking for guarantees from their providers that the raw materials contain only a minimum amount of lead, cadmium or mercury. Apart from complying with the RoHS requirements, makers are contending with the higher cost of raw materials, particularly steel and plastic. Due to fluctuating crude oil prices, the cost of plastic resins in China has gone up over the past 12 months. In addition, there is a marginal short supply of the material even as plastic processing companies run at full capacity.

The Trends of Export The production of washing machine is concentrated in the provinces of Jiangsu and Zhejiang, and Shanghai, which together account for 88 percent of all washing machines exported from the country. The majority of washing machine makers are locally owned foreign-invested. More than 50 percent of these suppliers have direct export capability, while the rest ship their products through trading companies. Many suppliers will have to increase export prices by up to 10 percent in the next six to 12 months due to the rising costs of raw material. Looking forward, the key product trends will be water-saving and energy efficient models. It provides another important opportunity for a growing laundry appliance market and China manufacturers. New washing technologies just emerging (e.g. detergent-less washing machines), also have substantial potential to drive future growth. The survey shows 64 percent of China manufacturers are focused on developing energy- efficient models, while 20 percent are working on the development of water-saving models. Rising energy costs have increased demand for energy-efficient products, and China manufacturers are focused on meeting this demand.